As an independent research firm, we are often asked by our clients to help them in their decision making process by providing objective analysis on recent disclosure trends. One of the goals of my blog is to highlight interesting or unique compensation disclosure examples that we discover as part of our research. One topic that we’ve seen increased interest in recently from our clients is in the area of ownership guidelines. As many of you know, ownership guidelines are pretty straightforward – they make sure executives have meaningful skin in the game.
As part of a recent custom project, John Prewitt, one of our Research Managers, came across a pretty unique example where ownership guidelines were outlined in an executive’s employment contract. The following excerpt is taken from the employment contract of Chesapeake Energy’s CEO which was filed as an exhibit to an 8-K on October 5, 2007:
2.4 Stock Investment. During the term of this Agreement, the Executive agrees to hold shares of the Company’s common stock having an aggregate Investment Value (as hereafter defined) greater than five hundred percent (500%) of the compensation paid to the Executive under paragraphs 4.1 and 4.2 of this Agreement during such calendar year.
Typically, ownership guidelines are policies adopted at the company level and not necessarily targeted to a single individual. Given the focus on ownership guidelines, it will be interesting to see if this example starts a trend and similar provisions become more common in employment contracts down the road. For those interested in learning more on this topic, we’ll be publishing two ownership guidelines reports later this year – one on executives and another for board members – in addition to articles in future newsletters.
Equilar sports note – Just like the Red Sox and Rockies, the Equilar company softball team keeps chugging along and finds itself playing in October (it certainly helps having the season start in August and not April). Congrats to everyone on another “hard fought” victory on Monday and clinching a playoff berth in the Foster City Co-Ed Recreational Softball League.
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This week kicks off the annual NASPP Conference here in San Francisco. To keep with our tradition of timing new product launches with NASPP conferences, we’re excited to announce what we believe is an extremely innovative new service for our clients.
As many of you know, in addition to our online databases, our research team is often asked to provide custom analyses for our clients. With our extensive databases and search tools, we are able to quickly identify relevant examples for our clients and deliver exactly what they need in a matter of days. For example, several recent projects include:
- an analysis of 70 CEO employment contracts to see if companies reimbursed the CEO for legal fees associated with contract negotiations;
- research on the treatment of discontinued or reduced SERP benefits at 10 companies; and
- a search for 20 examples of retention bonuses for key management team members at companies going through a CEO transition.
About a year ago, we recognized that these individual projects were forming an asset that could be of great value to our clients: “off-the-shelf” projects that our clients can use or easily customize. What better way to leverage the community of clients that we’ve built than by helping them access relevant projects for a fraction of the cost of having the analysis re-created from scratch? We then asked ourselves “What if we offered access to this collection of projects and allowed our clients to search for projects themselves?”
Hence, the birth of CustomInsight, thanks to Emilie Sharp and members of our Product Development team. Think of the Costco shopping experience. When going to buy your 500 rolls of toilet paper, you walk into the warehouse and see a new shipment of Ralph Lauren polo shirts for $9.99. In a matter of minutes, you’re able to get your holiday shopping done before Halloween and save hundreds of dollars in the process. Now doesn’t that feel good?
With our extensive library of custom projects, we hope that a number of our clients take the time to search CustomInsight and find those “diamonds in the rough” just like you do at Costco. We encourage you to take a moment and see how many projects in CustomInsight include your company. You may be surprised to find how many projects may already be a good match for what you’re looking for. For example, Bristol Meyers Squibb shows up in over 35 projects. And even if you don’t find exactly what you’re looking for, feel free to browse and see the types of projects that we’ve completed in the past. Hopefully, this will help you in determining the types of analysis that we can provide to help address thorny issues at your company or your client.
We’re very excited about CustomInsight and encourage those attending NASPP to stop by our booths (603 and 605) to see a quick tour. Also, we hope to meet a number of you during the conference. It’s amazing how we’ve grown over the years and made the Inc 1000 with the bulk of our sales closed over the phone. It’s always great to finally meet clients in person and shake their hands. And if you happen to run into Erika, please don’t bring up the USC-Stanford game. It’s tough being on the wrong end of one of the biggest upsets in college football history to a team that was a 40 point underdog, especially if you live in Stanford country. We look forward to seeing everyone!
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